CONFERENCE COMMITTEE REP. NO. 121-04
Honolulu, Hawaii
, 2004
RE: S.B. No. 2878
S.D. 2
H.D. 2
C.D. 1
Honorable Robert Bunda
President of the Senate
Twenty-Second State Legislature
Regular Session of 2004
State of Hawaii
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-Second State Legislature
Regular Session of 2004
State of Hawaii
Sir:
Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 2878, S.D. 2, H.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO THE FEDERAL TAX LIMIT ON COMPENSATION APPLICABLE TO THE EMPLOYEES' RETIREMENT SYSTEM,"
having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.
The purpose of this measure is to apply the federal tax limit on compensation to be taken into consideration in determining pension benefits under the Employees' Retirement System's (ERS) tax-qualified retirement plan.
Your Committee on Conference finds that the plan provided under the ERS is intended to be a tax-qualified retirement plan under section 401(a) of the Internal Revenue Code (IRC) of 1986, as amended. Pursuant to section 401(a)(17) of the IRC of 1986, as amended, the annual compensation that may be taken into account in determining benefit accruals under the ERS is limited. However, under Hawaii law, no provision existed to address such salary limits with respect to the ERS on July 1, 1996. Additionally, Article XVI, Section 2, of the Constitution of the State of Hawaii prohibits either the diminishment or impairment of an ERS member's accrued benefit. Therefore, your Committee determines that in order to accomplish retroactive compliance with section 401(a)(17) of the IRC of 1986, as amended, accrued benefits must be provided under a non-tax qualified plan for the affected members, with the necessary funds being appropriated to such non-tax qualified plan for the payment of the accrued benefits.
Upon further consideration, your Committee on Conference has amended this measure by:
(1) Including an appropriation amount of $369,350 to fund the non-tax qualified benefits for affected members of the ERS;
(2) Making the provisions of the measure effective on July 1, 2004; provided that the amendment to Chapter 88, Hawaii Revised Statutes, under section 2 of the measure is effective retroactive to July 1, 1996; and
(3) Making technical, nonsubstantive amendments for purposes of clarity and style.
As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 2878, S.D. 2, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 2878, S.D. 2, H.D. 2, C.D. 1.
Respectfully submitted on behalf of the managers:
ON THE PART OF THE HOUSE |
ON THE PART OF THE SENATE |
____________________________ MARCUS R. OSHIRO, Co-Chair |
____________________________ BRIAN KANNO, Co-Chair |
|
____________________________ DWIGHT Y. TAKAMINE, Co-Chair |
____________________________ BRIAN T. TANIGUCHI, Co-Chair |